Paxful's co-founder acknowledges guilt for conspiring in Anti-Money Laundering (AML) offenses, faces potential imprisonment.

Paxful's co-founder acknowledges guilt for conspiring in Anti-Money Laundering (AML) offenses, faces potential imprisonment.

Paxful Continues Unregulated Operations Amidst Leadership Changes and Regulatory Challenges

In a shocking turn of events, Artur Schaback, co-founder and former CTO of Paxful Inc., has pleaded guilty to conspiracy charges related to failures in maintaining an effective anti-money laundering (AML) program. Schaback's guilty plea comes amidst a series of changes in Paxful's leadership and operations.

Paxful, a popular peer-to-peer bitcoin marketplace, currently remains unregulated by top-tier financial authorities such as the SEC (United States), FCA (UK), BaFin (Germany), ASIC (Australia), or FINMA (Switzerland). This lack of oversight by these authorities means it is considered a higher risk platform compared to fully regulated exchanges or brokers.

Despite the recent guilty plea and resignation of Schaback, Paxful continues to operate in several markets, including Africa, where regulatory frameworks are emerging but not yet fully established for many crypto firms, including Paxful. In jurisdictions like Kenya and Nigeria, regulatory frameworks are only recently evolving or remain informal.

Nigeria granted crypto a legal status under the 2025 Investment and Securities Act, but formal licensing for many crypto service categories is still being implemented. Kenya is in the process of passing regulatory laws (Virtual Asset Service Providers Bill) requiring licensing and compliance, with Paxful among the expected applicants when these laws come into effect.

However, some countries like Zimbabwe outright ban crypto, yet Paxful remains popular in peer-to-peer trading despite regulatory challenges. Paxful maintains AML compliance and some regulatory adherence in its operational jurisdictions but is barred from serving certain regions like selected U.S. states due to regulatory restrictions.

Following Schaback's guilty plea, Paxful suspended its marketplace operations in April 2023 due to regulatory challenges and key staff departures. The marketplace resumed operations in May 2023 after a month-long hiatus.

Roshan Dharia was appointed as the new CEO of Paxfur in June 2023, initially in an interim capacity. Dharia, a former senior executive at TrustToken, has since been confirmed as the permanent CEO of Paxful. Dharia takes over from Ray Youssef, the former CEO of Paxful, who stepped down in April 2023.

Schaback admitted to allowing customers to trade on Paxful without proper know-your-customer (KYC) checks from 2015 to 2019. However, significant improvements have been made to compliance processes, including KYC, monitoring, reporting, and sanctions screening.

Despite the internal changes and regulatory challenges, Paxful has tripled in size in the last twelve months, with a global team of nearly 100. The Department of Justice (DOJ) has not clarified how Schaback's guilty plea will affect Paxful's current operations and regulatory standing. The representative from Paxful did not provide specific details on how Schaback's guilty plea affects the company's current operations.

In a July 9 press release, Paxful announced Schaback's resignation as a director at Paxful Holdings, Inc. and its affiliates. It is unknown whether other former Paxful executives will face similar charges.

Users should exercise caution given the absence of top-tier regulatory protection. Paxful continues to face scrutiny due to its lack of high-tier financial regulation.

1. Despite Schaback's guilty plea and the resulting regulatory scrutiny, Paxful, a peer-to-peer bitcoin marketplace, is expanding its operations into Africa, where crypto regulation is still evolving.
2. In Africa, Paxful continues to offer digital assets, such as bitcoin, to users, even in jurisdictions like Nigeria and Kenya, where regulatory frameworks are still being developed.
3. As it operates in Africa, Paxful is making efforts to comply with AML regulations and other regulatory requirements, as it aims to secure a license when the necessary regulatory laws are passed.
4. As Paxful operates in markets with varying degrees of crypto regulation, users should exercise caution due to the lack of top-tier financial authority oversight.

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